EU imposes new sanctions on Russian financial institutions

The EU has set a new priority area for sanctions. These are now the financial institutions that support the supply of military products to Russia.

Source: Reuters

Details: The European Union may tighten sanctions targeting financial institutions that support the flow of military products to Russia and the supply of goods produced by Western subsidiaries in Southeast Asia.

Since 2022, the EU has imposed a series of sanctions on Russia over its full-scale invasion of Ukraine. The EU's sanctions representative, David O'Sullivan, said that these sanctions are not a "magic bullet", but their goal is to make the Russian military machine slower, more expensive and less effective. 

He also noted that some companies are trying to circumvent the sanctions by using dual-use supply routes to Moscow.

O'Sullivan stressed that following diplomatic efforts, the EU has managed to reduce such supplies through Central Asian countries, including Kazakhstan, Uzbekistan and Armenia. However, stopping similar flows through Southeast Asia, where countries are producers of goods, not just transit stations, is a much more difficult task.

"A lot of the product going through China is made by subsidiaries of western companies in southeast Asia," O'Sullivan said.

Special attention in the sanctions activity is paid to financial institutions that finance the transshipment of military products to Russia. "Where these are identified, these institutions will be contacted saying...if they do not desist they are at risk of being listed," O'Sullivan warned, adding that the US has already made significant progress in this area.

He also noted that the biggest challenge for the EU is to harmonise the implementation of sanctions packages across the 27 member states. At the same time, O'Sullivan stressed that sanctions are already pushing Russia towards a war economy, which will have serious consequences for its economic future in the next year or two.

Background: Since the beginning of 2024, Western countries have spent US$2 billion on purchases of Turkish petroleum products made from Russian oil.

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